U.S. and Brent crude futures have slid more than 9 percent from this year’s peak in late January. Brent was heading for a weekly loss of nearly 8 percent; U.S. crude was on track for a 9 percent weekly drop. Both would be the biggest weekly declines since November, 2016.
Crude futures followed the stock market lower. The S&P 500 stock index .SPX fell to its lowest level since Oct. 25.In addition, crude throughput in the North Sea Forties pipeline continued to ramp up following a restart, a trade source told Reuters.
Investors were already worried that rising U.S. production will overwhelm efforts by OPEC and other producing nations to cut supply.
“Oil futures really came under pressure especially when they crossed $60; it really seemed like traders started to liquidate,” said Philip Streible, futures broker at RJO Futures in Chicago.
Brent futures LCOc1 fell $1.87, or 2.9 percent, to $62.94 a barrel by 12:18 p.m. EST (1718 GMT), its lowest since Dec. 14.
U.S. West Texas Intermediate (WTI) crude CLc1 was down $1.86, or 3 percent, at $59.29, its lowest since Dec. 26.
The market had already largely expected the North Sea Forties pipeline to restart without major market disruption, but the news that it would reach full rates over the weekend intensified oversupply worries, said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.
”The idea that it is back up and running normally, combined with the data that show U.S. production is rising, contributes to the overall idea that U.S. production could offset cuts by OPEC.”
“What you’re seeing is further liquidation of the length in the market. The dollar strength is also contributing to it.”
U.S. domestic crude production hit a record in the most recent week, the U.S. Energy Information Administration (EIA) said Wednesday.
“It has now become painfully clear for beleaguered oil bulls that the early-year rally was not justified,” PVM Oil Associates’ Stephen Brennock said in a note. “In its place is a deepening price rout that has quashed any lingering pockets of optimism.”
OPEC member Iran also announced plans on Thursday to increase production within the next four years by at least 700,000 barrels a day.
“We think that surging supply and slowing demand growth will tip the market back into a surplus this year,” analysts at Capital Economics said in a note.
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